Sugar is sweet, particularly for governments that subsidize at our expense.
If there is one over-arching conclusion that can be drawn from the first two weeks of the Donald Trump administration, it’s that President Trump aims to keep the promises he made to his voters during the 2016 campaign. The degree to which Trump is striving to keep those promises is nearly unheard of (Americans had come to expect that once a politician becomes elected to office, that politician abandons many of the campaign promises that were made or severely compromises them).
But President Trump is keeping his word when it comes to these promises, especially when it comes to trade. Among his first acts upon taking office was withdrawing the United States from the Trans-Pacific Partnership — and the president has continued to send strong signals that the United States simply will not be taken advantage of on the international stage. The U.S. will no longer make “dumb deals,” as the president has said, and his “America First” philosophy signals that a host of current policies will be re-examined within this prism.
As it moves forward on U.S. trade policy, the administration should find a new study by Virginia’s Thomas Jefferson Institute for Public Policy particularly useful. In Toward a Freer Market for Sugar, TJI Senior Fellow James Musser explores the current problems faced by America’s sugar industry, especially when it comes to the threat of cronyist practices by America’s competitors across the globe. Musser explains:
The world market in sugar has been warped by subsidies and foreign sugar is frequently sold at prices far below the cost of production. In fact, the twenty-five year average cost of production for foreign producers is 50% higher than the average price. U.S. sugar producers are not in competition with sugar producers in other countries so much as they are in competition with foreign governments. [Emphasis added.]
As Trump and others understand, foreign governments use trade policy as a form of economic warfare against the United States, massively subsidizing their industries and agriproducts in order to vastly undercut the market price of goods. At the same time, over the last decade, U.S. businesses have seen their costs balloon as regulatory and labor costs skyrocketed under an administration that talked about creating jobs but was more interested in pushing the agendas of its special interest constituents.
But with a new administration, the possibilities for positive reform are endless, and Musser has some excellent recommendations — looking at the government-run loan programs in the U.S., for instance, and both the allotment and quota systems administered by the U.S. Department of Agriculture.
What is essential is to harmonize the administration’s over-arching goals with the long-term tools provided some well-crafted and thoughtful pieces of legislation. One such tool could be the “Zero-for-Zero” policy crafted by Rep. Ted Yoho (R-FL).
As trade policy experts will tell you, the freest markets are the best markets. But given how much distortion there is in the global sugar marketplace, a return to true free markets will take both time and effort. Until then, however, the United States cannot unilaterally disarm (as has certainly been the case in recent years).
Of zero-for-zero, TJI’s Musser says:
All parties should be able to find common ground in the approach proposed in Congress by Representative Ted Yoho (R-FL), along with a group of bi-partisan co-sponsors, which calls on the president to engage in negotiations through the World Trade Organization to end all direct and indirect subsidies in the production and export of sugar. The approach in this legislation would truly move the world toward a freer market in sugar.
In an environment where change is the order of the day and solving the problems plaguing America is the first priority of the new administration, the global trade in agricultural products is high on the list of items where reform is essential. We hope those working on trade policy reform in the Trump administration will look at the Thomas Jefferson Institute’s paper on the global sugar trade and that they will work with representatives like Ted Yoho who have crafted smart ideas that put America first.
Photo credit: Glen Lowe, Flickr, Creative Commons